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COVID stimulus deal: What Democrats, Republicans and Trump want
A new coronavirus stimulus deal is still in the works between Democrats and Republicans, bu they can’t agree on a conclusion.
The holidays aren’t looking bright for Jocelyn Fox, an unemployed single mother who is grappling with competing demands: trying to play teacher for her two housebound children while struggling to make ends meet, a big stressor since her jobless aid expires soon.
“I can’t even think about holidays while unemployed. It’s a big, scary mess,” says Fox, 32. “I keep telling the kids to just be thankful we still have a house and can put food on the table.”
Fox, who lives in Ypsilanti Township, Michigan, was laid off from her job as an inventory stocker at an auto-parts retailer in March. Since then, she’s struggled to find work.
Eviction moratoriums have been a lifesaver for her, she says. Though Fox, like millions of other Americans who face jobless benefit expirations, doesn’t know how she’ll pay her bills or rent, which she is already behind on, once her aid ends in late December.
Fox opted to temporarily have her children do remote learning in the fall after her car broke down, but the school recently shifted fully online following a spike in COVID-19 cases in the state, she says. That’s made it harder for her to find a job while taking care of her children at home, she added.
“It’s the worst feeling as a mother. I cry a lot,” Fox says, adding, “If I don’t get help, I don’t know what I’ll do.”
Millions of jobless Americans, like Fox, could suddenly be cut off from their unemployment benefits the day after Christmas if Congress fails to extend relief programs, with many facing lasting scars as the worst pandemic in a century threatens to deepen their economic pain.
About 12 million workers could lose one of two critical unemployment lifelines from the CARES Act on Dec. 26, including 7.3 million who could be cut off from Pandemic Unemployment Assistance (PUA) and 4.6 million who may lose Pandemic Emergency Unemployment Compensation (PEUC), according to estimates from The Century Foundation, a nonprofit think tank.
The loss in jobless aid would come as other stimulus relief is set to expire after December, including a federal ban on rental evictions that could put 30 to 40 million people at risk of eviction as moratoriums expire, according to the Aspen Institute, another think tank.
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Health experts are warning of a bleak winter. Without unemployment benefits and with savings badly depleted, American families will be at high risk for food insecurity and loss of their homes, and many may be unable to pay for health care during the pandemic, according to Andrew Stettner, senior fellow at The Century Foundation.
“Unemployment benefits for many families are the last thin line between surviving a difficult situation and facing lasting financial disaster,” says Stettner. “If you get into a situation where you have no source of income in the middle of a pandemic, you’re going to drain your savings, postpone health care, not put food on the table or possibly lose your home.”
Despite progress toward a COVID-19 vaccine, cases are on the rise in all 50 states. The surge has led to the restriction of hours and capacity of businesses across the country, along with school closures in New York City.
The spike in COVID-19 cases has forced Kayleigh Brewer of Louisville, Kentucky, to go back on unemployment for a second time this year. Thursday was her last day — for at least the next three weeks —working as a server assistant at Repeal, a steakhouse on the city’s Whiskey Row, a block-long stretch that once served as home to the bourbon industry.
Indoor service is suspended for bars and restaurants in the state until Dec. 13 following a wave of outbreaks.
Brewer, who was already furloughed between March and July, is worried about how she’ll pay her bills once the benefits expire at the end of next month, especially if the state’s restrictions get extended and she can’t return to work, she says.
“It feels very depressing, honestly. It’s so scary not knowing when I can return to work,” Brewer, 23, says, adding that her weekly benefits of $175 aren’t enough to live off. “It’s scary not knowing whether another stimulus package will come.”
What are the two programs?
In March, the CARES Act created two programs to help keep jobless workers afloat after the coronavirus pandemic battered the global economy and led to a historic wave of unemployment.
The first was a federally funded program called PUA, which provides jobless benefits to workers who typically aren’t covered under traditional unemployment, including the self-employed, independent contractors, temporary workers and gig workers. It had also included a $600 weekly supplement for jobless workers through late July.
Many out-of-work Americans have already used up their state unemployment aid, which typically expires after six months. Now they have transitioned to PEUC, a federal extended benefits program that lasts an additional 13 weeks. For instance, if a jobless worker in New York gets $504 in state benefits, the federal extension covers that.
Who’s cut off?
About 7.3 million workers will see their PUA benefits expire on Dec. 26, and roughly 4.6 million workers will see their PEUC benefits expire then. Plus an estimated 4.4 million workers will have already exhausted their CARES Act benefits before the cutoff in late December.
Unless these programs are extended, only eighteen states will provide any type of additional benefits to millions of the long-term unemployed, according to Stettner. Only 2.9 million of those running out of PEUC will be able to collect extended benefits — which last an additional 13 to 20 weeks — in 2021, but states will have to pick up half of the cost at a time when their trust funds are depleted, he added.
That means 13.5 million workers in total will have lost CARES Act benefits by year’s end.
“These are people who have lost jobs through no fault of their own in a pandemic,” says Stettner. “The whole value of unemployment benefits is that it helps people avoid falling into poverty and extreme hardship.”
What’s next for a stimulus package?
Democrats and Republicans lawmakers have debated renewing some of the programs, but progress has been slow amid deep partisanship in Washington. The bill could be smaller since Republicans are likely to keep control of the Senate.
House Democrats are targeting a $2.2 trillion package. Senate Republicans introduced a smaller $500 billion spending package that included aid for small businesses and federal unemployment benefits. But Democrats blocked it after the measure omitted $1,200 stimulus checks and aid for states.
Congress is also hurtling toward a Dec. 11 deadline to fund the federal government during a contentious lame duck session. It’s possible that some pieces of funding, either unemployment aid, an extension of the eviction moratoriums or a stimulus check, could make it into a bill to keep the government funded.
To be sure, the U.S. has recovered about 12 million, or 55%, of the 22 million jobs wiped out in the health crisis as states have reopened restaurants, shops and other businesses shuttered by the outbreak, and brought back many furloughed workers
But the economy is still short roughly 10 million jobs compared with before the pandemic.
Recovering the rest could take several years, economists say, and a growing share of temporary job losses have become permanent as businesses downsize or close for good.
Though the ranks of workers permanently laid off in October dipped from 3.8 million to 3.7 million. The figure had been steadily rising as employers cut ties with a growing share of the workers they had furloughed. And the number of people who have been jobless at least six months — known as long-term unemployed — jumped from 2.4 million to 3.6 million, highest since 2014.
Racial disparity among jobless grows
Black and Latino communities, who have seen more job loss in this recession and have less wealth to fall back on, are at particularly high risk for prolonged unemployment, and the lack of stimulus threatens to hit these workers the hardest, according to Heidi Shierholz, senior economist and director of policy at the left-leaning Economic Policy Institute.
“The negative implications of this unemployment benefit expiration will hit Black and Latino workers, their families and their communities harder and will exacerbate income inequality by race because they’re more likely to be in occupations where they experience job losses in this recession,” says Shierholz.
While white workers were laid off at higher numbers than usual at the start of the pandemic, the share of unemployment insurance claimants who were Black soared by 40% from April to September—just as the benefits began to be cut off, according to The Century Foundation.
Permanent unemployment is more typical for Black workers, experts say. Between September 2018 and September 2019, when the labor market was stronger than now, the average length of unemployment for Black jobless workers was 25.5 weeks—five weeks longer than for their white peers, according to The Century Foundation.
And Black workers were 16% more likely than white workers to be unemployed for at least six months during the peak of the Great Recession.
Unusual to cut benefits this early, experts say
If benefits are cut off in December, it would be the earliest cutoff of extended benefits in any recent recession, experts say. In the previous four recessions, extended benefits were available to workers until at least three years after the start of the recession.
During the Great Recession, for instance, up to ninety-nine weeks of benefits were available to the jobless, and extensions were available to those who exhausted state benefits between December 2007 and December 2013.
Blocking more relief could hamper the economic recovery if households can’t maintain spending, experts say. Not providing stimulus could also cost millions of jobs. Without federal aid to state and local governments, 5.3 million workers will likely lose their jobs by the end of 2021, according to the Economic Policy Institute.
Congress needs to extend the weekly $600 unemployment boost, extend the PUA extension beyond 2020 for self-employed and other workers who are ineligible for traditional unemployment insurance, and add extra weeks for those who exhaust their benefits, Shierholz argues.
“To cut off jobless benefits this early is pretty radical when the labor market is still as weak as it is,” says Shierholz. “It’s unthinkable that Congress would allow millions of unemployed people to go without a safety net. It’s also bad economics. It will make the recovery slower.”
Do benefits discourage employment?
Republicans have argued that the $600 federal supplement to state unemployment insurance discouraged many Americans from returning to work. Over the summer, Republican lawmakers proposed reducing the federal bonus to $300.
And earlier this month, after a government report showed 638,000 job gains in October, Senate Majority Leader Mitch McConnell, R-Kentucky, said, “Our economy is really moving to get back on its feet. That I think clearly ought to affect what size of any rescue package we additionally do.”
But a study by Yale University economists found that job gains for workers who received the extra $600 were similar to those of other workers and they returned to their previous jobs at similar rates.
While some people may stay on unemployment longer before going back to work, that has little effect on the broader economy because unemployment remains high at 6.9%, experts say. There are about 5 million more unemployed Americans than job openings, Shierholz says. In that environment, she says, most people would prefer to have a job than stay on temporary benefits and risk an extended bout of joblessness.
“If somebody says no (to a job offer), other people are happy to take the job,” says Till von Wachter, an economics professor at University of California Los Angeles.
Plus, he says, the economic gains from helping laid-off Americans weather the downturn far outweigh the drawbacks of some people staying on unemployment longer.
“You have to look at the costs and the benefits,” he says. “The really bad idea is to let a lot of people exhaust their benefits.”
Contributing: Paul Davidson